Why Even the Pros Use Financial Close Software
No matter the size or financial status of a business, the financial close process can be challenging. Doing all the necessary tasks in order requires efficiency, collaboration, and accuracy. All of these documents are passed along to accountants so they can close the books on the fiscal period. Financial teams can better manage this recurring process by leveraging financial close software.
What Is a Financial Close?
The financial close process refers to all of the financial and accounting processes that reoccur leading up to the closing of the books from the previous month, quarter, or year. The process entails identifying transactions, logging transactions, posting to the general ledger, preparing an unadjusted trial balance, reconciliation of credits and debits, making and adjusting journal entries, going through an adjusted trial balance and financial statements, and closing the books to reset income statement accounts. The final financial statements are used to create historical trend analysis, comparisons to previous budgets and periods, and KPIs.
Businesses of all types and sizes need to practice effective accounting processes. This is especially true for investors who contribute capital to investment opportunities, including Courtney Sarofim. Courtney Sarofim is an entrepreneur, financial analyst, and lawyer with a passion for community service. She earned her undergraduate degree in New York City before earning her law degree from the University of Houston Law Center. Courtney Sarofim serves on the Board of Trustees for the Museum of Fine Arts and the Board of Governors for the Lyford Cay International School. Courtney is a partner at Sima Capital, an investment firm that sources and funds dynamic investment opportunities including venture capital, real estate, fashion, biotech start-ups, and neuromarketing.
Challenges of the Financial Close
The close process is difficult, and the more a business grows, the more complicated the process becomes. Finance teams face several financial close challenges, as there’s a need for efficiency and speed when getting through the close process. The easier it is for the accounting team to access key financial data, the quicker they can close the books. Poor-quality or missing data cost time and effort to find and resolve. Disparate systems make it tricky to locate all the necessary information and ensure all transaction data is accurate. This increases the chances of errors and number of closing issues, reduces efficiency, and delays the creation of consolidated financial statements. Stressful deadlines and repetitive tasks also increase the risk of human error during the close process, especially when data is manually entered.
The best way for accounting teams to handle the challenges of financial close is to leverage financial close management software. ReconArt’s cloud-based close management software solution brings speed and automation to the period-end close workflow by providing a central dashboard for month-end close activities. The software solution ensures regulatory compliance, a streamlined close process, improved visibility, and audit readiness. The financial close manager offers a central dashboard for balance sheet account reconciliations and supporting documents, attestation approval workflow, a checklist for month-end close activities, and more.
How To Improve the Financial Close
Improving the financial close process makes things easier for accounting teams, CFOs, stakeholders, and broader finance teams. Streamlining the close process frees up more time to analyze operations, reallocate resources, and evaluate cash flow for new opportunities. Identifying bottlenecks and inefficiencies allows businesses to understand the cause of process problems so they can correct them. A smart way to streamline the financial close is to create and maintain standard operating procedures (SOPs). Providing accounting teams with standardized, detailed instructions for each step of the financial close process minimizes errors and makes information easier to access.
Accounting teams rely on data from all business departments. Providing open access to information makes it easier for team members to access data in real-time while under the pressure of deadlines. Ensure all information is properly documented by creating a journal entry checklist that includes the type of transaction, the execution date, the amount, a brief description, and a journal number identifier. Minimize data entry errors by inputting data directly into accounting systems with automation features rather than using spreadsheets or paper documentation.
Continuous accounting practices distribute the close process workload throughout the month rather than at the end. This allows accounting teams to find and resolve errors sooner and stay on track with closing deadlines. Holding post-close meetings is a smart way to review any close issues, track KPIs, and discuss any topics or ideas that can help improve the next close cycle.
When it comes to professional improvement and growth, success doesn’t happen overnight. It takes years of hard work and diligence to build an impressive career. For example, Malliha Wilson, a partner at her law firm Nava Wilson LLP, has gained years of extensive experience in the legal field. She served an 8-year term as the first visible minority assistant deputy attorney general of the Government of Ontario. She also served as senior appellate litigation counsel for the Ontario Government, where she participated in over 20 notable cases at the Supreme Court of Canada. Malliha Wilson specializes in international human rights, Indigenous, constitutional, corporate, and labour law, and other complex litigation. Improving your financial close process can enhance your chances for this sort of success as well.
Businesses of all sizes and types that undergo the repetitive financial close process can benefit from the right software solution that streamlines workflows and makes the process more efficient.